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Prime Minister Justin Trudeau and Governor General David Johnston pose for a group photograph with members of the cabinet November 4, 2015 at Rideau Hall in Ottawa.

Dave Chan/The Globe and Mail

Eveline Adomait is an economics professor at the University of Guelph. She is the author of Cocktail Party Economics and Dinner Party Economics.

It is true that it is 2015, as Prime Minister Justin Trudeau recently noted – at least until the end of the year. However, that fact alone does not explain why Mr. Trudeau's cabinet is half women, because it's also 2015 in countries that have very few women in national leadership. I think there is a compelling economic story that can help explain.

I came upon this theory in a departmental seminar given by my colleague and Canada Research Chair, René Kirkegaard (yes, he is related to the famous Danish philosopher), about a paper titled Contracting With Private Rewards. To be perfectly honest, this paper is not accessible to the general public unless you understand contract theory and are good at math, so I'll stick with the cocktail-party version.

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The story goes something like this: An employer would like to set up an employment contract that motivates the employee to work very hard. Unfortunately for the employer, there is critical information they don't know about the employee. Specifically, the employee may or may not have a life outside of work that has private benefits affecting her decision to put in lots of effort at work – family, hobbies, friends or volunteer work that gives the employee "payment," even if it isn't monetary.

Without taking these outside options into account, normal contract theory would suggest that the employer can solve the effort problem by giving a low base or starting pay, supplemented by high incentive pay that rewards hard work. This is standard economic thinking, which gives rise to commission sales, bonuses and stock options.

However – and this is the contribution made by Prof. Kirkegaard's paper – outside private rewards change that calculation so that the standard contract is not sufficient incentive. People with rich outside lives are not induced to put in lots of effort for such a contract, because the starting pay is just too low.

The solution for the employer should be to offer higher initial pay, high enough to induce the employee to give up their personal life in one fell swoop. Why? Because they make so much money from work that they can maintain a meaningful life: a lovely home, the best child care, a nice car, the latest gadgets. Once they are working really hard, the employer doesn't need to give them further incentive pay to induce even more work – they are already all-in.

Notice that both scenarios involve a contract set by the employer and the employee making a choice. The variables of employees' lives beyond work changes how they respond to a particular employment contract. It's a smart idea for the employer to take this into consideration if its goal is to get people to work hard. In a sense, the company would much prefer a worker to have work-wealth balance rather than work-life balance.

How does this relate to women in politics? It turns out that most women don't run for office the way most men do. It is tempting to think that this is about discrimination, but it may be that women are making rational choices, given the typical contract offered by party leaders.

If women tend to derive more benefits from family, hobbies and friends than men do, the standard contract makes it less attractive for women to run.

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Campaigning takes lots of effort, and the standard reward for a winning candidate is to start as a backbencher and earn political chops for the next election. This payment plan doesn't turn as many women into candidates as it does men. It just isn't worth it for women, given everything else they have going on in their lives outside politics – especially if they are of child-rearing age.

What Mr. Trudeau did was to change the contract for women. He promised that half his cabinet would be women, and women believed him. Now, the starting payment for many female candidates is not the backbench, but a cabinet post.

My prediction is that these female cabinet ministers are going to work really hard and not have much personal life – by choice.

I also predict that women will see the Liberal Party in a different light and more will consider running for office, given this new implied contract.

Meanwhile, it will be interesting to see how things play out for the Conservatives. Interim leader Rona Ambrose touched on the different way men and women see running for office late last week, when she told the CBC that she wasn't prepared to put her family through the decade-long commitment that might be required for a run at becoming prime minister. Mr. Trudeau obviously thought differently about committing his young family.

I do think it was a really good move by Ms. Ambrose's party to choose her for the interim position – for the Conservatives, it keeps women in the game, and maybe they can ultimately find another woman who wants to lead the party.

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The bottom line is that you get what you contract for.

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